Decoding SBTi 2.0: What Businesses Need to Know About the Updated Corporate Net-Zero Standard

In an era where climate change poses unprecedented challenges, businesses are under increasing pressure to align their strategies with global sustainability goals. The Science-Based Targets Initiative (SBTi) has released its Corporate Net-Zero Standard Version 2.0 draft for public consultation, marking a significant evolution in corporate climate action frameworks.

This blog examines the key updates introduced in SBTi 2.0, offering a comprehensive overview of how these changes will impact businesses worldwide. From tailored requirements based on company size and geography to enhanced accountability and progress tracking, the new standard emphasizes actionable steps toward achieving net-zero emissions.

Whether you're a sustainability leader, investor, or supply chain manager, understanding SBTi 2.0 is essential for staying ahead. Are you ready to future-proof your business against climate change?

Join us as we explore the implications, challenges, and opportunities presented by SBTi 2.0—and discover how your business can take proactive steps to lead the fight against climate change.

Introduction

The Science Based Targets initiative (SBTi) enables companies and financial institutions to set greenhouse gas (GHG) emissions reduction targets aligned with climate science, aiming to limit global warming to well below 2°C, preferably 1.5°C, as per the Paris Agreement. 

SBTi provides standards, tools, and guidance for credible, science-based emissions targets, validating them to ensure alignment with climate goals. It is a collaboration among CDP, the United Nations Global Compact, the World Resources Institute (WRI), and WWF.

SBTi drives corporate climate action by guiding organizations to reduce emissions and achieve net-zero by 2050. Setting targets through SBTi enhances brand reputation, regulatory preparedness, innovation, and investor confidence.  

What is SBTi 2.0?

SBTi 2.0 refers to the updated version of the SBTi Corporate Net-Zero Standard, released for public consultation in March 2025. This version represents the most significant overhaul of the SBTi framework since its inception, introducing new guidelines and requirements to enhance the credibility, accountability, and effectiveness of corporate climate targets.

SBTi 2.0 marks a fundamental shift from simply setting science-based targets to ensuring real-world performance and accountability. It aims to make corporate climate action more practical, credible, and effective in delivering the emissions reductions needed to meet global climate goals. 

What SBTi 2.0 Means for ESG Reporting and Net Zero Strategies?

The release of SBTi 2.0 marks a pivotal moment in the global effort to combat climate change. With the growing urgency to limit global warming to 1.5°C, businesses are under increasing pressure to align their strategies with science-based targets. By introducing more nuanced requirements and flexibility, SBTi 2.0 empowers organizations to take meaningful action while addressing their unique challenges.

The enhanced focus on carbon removals and beyond-value-chain mitigation reflects a broader understanding of corporate responsibility in a world where climate impacts extend far beyond direct emissions. This evolution signals a shift from ambition-driven frameworks to performance-driven ones, ensuring that companies not only set goals but also deliver measurable progress.

Key Features of SBTi 2.0

• Companies are categorized by size (using EU regulatory definitions) and geography (based on World Bank classifications), with tiered requirements tailored to these distinctions.
• Large companies in high-income countries must set near-term and net-zero targets for 2050 or sooner.

• Separate targets are required for Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy) emissions, emphasizing distinct reduction strategies for each.
• Increased flexibility in Scope 3 target-setting includes options such as green procurement and low-carbon revenue, rather than blanket absolute reductions.
• Companies must report Scope 2 emissions both by where the energy is used (location-based) and how it's purchased (market-based), ensuring true accountability even with renewable energy certificates.

• Introduction of interim targets for carbon dioxide removal (CDR), particularly for residual Scope 1 emissions.
• The draft encourages early action to scale the nascent carbon removal market.

• While BVCM efforts will not count toward achieving science-based targets, companies can now gain formal recognition for these initiatives, allowing for broader climate impact beyond direct operations.

• A new requirement mandates companies to regularly assess and communicate progress against their targets, fostering greater transparency and accountability.
• Validation processes have been refined to ensure claims are consistent, transparent, and accurate.

• Companies setting targets in 2025–2026 will continue using the current standard (Version 1.2), which remains valid until the end of 2030.
• Starting in 2027, all new targets must align with Version 2.0 criteria.

What’s New Compared to SBTi Version 1.0?

Key Updates in SBTi's Version 2.0 Standard Drive Companies Toward Net Zero

Here are some updated standards of SBTi's version 2.0 that has released a draft of its Corporate Net-Zero Standard Version 2.0, which aims to enhance corporate climate action by addressing several critical gaps.

• The new standard emphasizes tracking progress toward targets rather than just assessing ambition. This ensures that companies are held accountable for their emissions reductions.
• It includes a new validation model to facilitate ongoing improvement throughout a company's transition to net zero.

• The draft mandates Scope 3 targets for large companies, addressing the underreporting of value chain emissions, which account for over 70% of corporate footprints.
• It proposes requiring companies to engage their Tier 1 suppliers in setting net-zero targets, extending decarbonization efforts across the value chain.

• The use of carbon credits is limited; offsets are prohibited for Scope 1 and 2 reductions and capped at 10% for Scope 3 emissions until 2030.
• This change aims to prevent reliance on low-quality credits and ensure real emissions reductions.

• Companies must achieve a 50% reduction in emissions by 2030 compared to 2019, ensuring front-loaded reductions and aligning with global climate goals.
• This accelerates the pace of decarbonization, addressing delays in corporate trajectories.

• The standard introduces more stringent criteria for Scope 2 emissions, requiring location— and market-based targets to reflect grid emissions accurately.
• This change prevents companies from claiming lower emissions solely through renewable energy certificates without grid impact.

• Version 2.0 offers more flexible pathways for companies to set and achieve targets, considering factors like business size and geographic location.
• It aims to make it easier for companies in emerging economies to set science-based targets.

• The draft emphasizes carbon removals and recognizes mitigation efforts beyond a company's value chain, encouraging broader climate action.

These updates are designed to accelerate corporate decarbonization and ensure that companies' climate actions are aligned with the latest climate science and global goals.

Challenges for Businesses

While the updates offer significant advantages, they also introduce new complexities:

• Increased Reporting Requirements: Companies must allocate resources for regular assessments and transparent communication of progress.
• Higher Standards for Large Companies: Businesses in high-income countries face stricter requirements, including mandatory net-zero goals by 2050.
• Adapting Supply Chain Strategies: The flexibility in Scope 3 targets demands careful planning to balance cost-effectiveness with impact.

As the consultation period remains open until June 1, 2025, stakeholders have an invaluable opportunity to shape the future of corporate climate action. Whether you're a sustainability leader or an industry expert, your input can help refine this standard to address real-world challenges while driving impactful change.

Businesses should seize this moment to evaluate their current climate strategies and prepare to transition to Version 2.0. By doing so, they can meet compliance requirements and establish themselves as leaders in the global fight against climate change.

How Can Organizations Set Up an SBTi with the Help of Zero Circle? 

Zero Circle can help organizations set Science-Based Targets (SBTi) by leveraging its expertise in sustainability and climate action. 

Zero Circle can assist companies in conducting a comprehensive greenhouse gas (GHG) inventory to establish a baseline for Scope 1, 2, and 3 emissions, which is essential for aligning with the Science-Based Targets Initiative (SBTi) criteria. 

This process helps organizations demonstrate leadership in climate action, mitigate risks, and align with global sustainability goals:

• The process begins with data collection and analysis, where Zero Circle assists in gathering and assessing emissions data to establish a baseline. 
• Next, target setting involves using this data to define ambitious yet achievable emissions reduction targets that meet SBTi criteria. 
• Zero Circle provides tools and expertise to ensure these targets are aligned with the goals of the Paris Agreement.
• Finally, implementation and monitoring involve integrating these targets into business strategies and regularly tracking progress, with Zero Circle offering ongoing support and guidance to ensure successful execution and reporting.

How Businesses Can Prepare

• Engage with the Consultation Process: The public consultation is open until June 1, 2025, allowing businesses to influence the final standard.
• Assess Current Targets: Companies with existing near-term or net-zero targets should evaluate how these updates might affect their strategies.
• Plan for Transition: Businesses that have set targets should align their practices with the draft guidelines to prepare for a smooth transition to Version 2.0.

What are the differences between SBTi, ISO, TCFD, and Net-Zero?

Here's a comparison of ISO, TCFD, and Net-Zero:

Taking a look ahead

The release of SBTi 2.0 represents a transformative step forward in corporate climate action, emphasizing accountability, flexibility, and measurable progress. By addressing critical gaps in the previous framework, this updated standard empowers businesses to align their strategies with global climate goals while navigating the complexities of emissions reductions, carbon removals, and value chain engagement.

As the consultation period remains open until June 1, 2025, organizations have a unique opportunity to shape the future of this framework. Engaging with the process, assessing current targets, and planning for a seamless transition to Version 2.0 will position businesses as leaders in sustainability and innovation.

The journey toward net zero is not without its challenges, but it also offers immense opportunities for growth, resilience, and leadership. By leveraging Zero Circle's expertise and embracing the enhanced standards of SBTi 2.0, companies can meet compliance requirements and drive meaningful change in the global fight against climate change. Don’t wait for the standard to become mandatory. Act now, and position your business as a climate leader. Zero Circle is ready to help—let’s build a sustainable future together.